Recording royalties are the most basic royalties artists and labels receive every time their master recording is downloaded (e.g. on iTunes) or streamed (e.g. on Spotify). They are collected by the distributor directly from stores and streaming platforms on behalf of labels. An artist’s label will then collect the recording royalties and distribute them to the artist. If an artist is not with a label, he or she must make sure that there is a direct contract and they receive recording royalties directly from the distributor.
If the distributor is not paying you royalties or your royalties are not commensurate to the number of streams and performances, you need to hire an entertainment attorney savvy in these matters. As these issues can be problematic, it is generally recommended that artists stick with labels, and not go directly to distributors.
You may also earn royalties from advertising attached to your performance (e.g. a YouTube video). YouTube collects royalties using a “Content ID” platform, which creates an audio fingerprint of a particular recording and adds up every single time someone uploads and streams it. In order to collect your royalties from YouTube, you need to register your master with a “Neighboring Rights” company. Again, a knowledgeable attorney will help you out and ensure this is done in a legally binding fashion and you collect what is due to you in the long run.
Neighboring rights (“NR”) are the rights to publicly perform recordings. In other words, NR’s are performance rights (PR’s) for sound recordings (performance rights are for musical composition/singing). Record labels and performing artists collect NR royalties each time their recordings are broadcast, commonly on radio, cable TV, Spotify or Pandora. They are slightly different from country to country so you need to hire an international or local attorney familiar with copyright and trademark matters.
Record labels and performing artists own the rights to sound recordings, which means they are the ones who collect NR royalties. Publishers and composers/songwriters own the rights to compositions and collect the publishing-related royalties (PR’s).